FCC Chief Approves Satellite Radio Merger

Federal Communications Commissions Chairman Kevin Martin has finally given his blessing to the merger of XM and Sirius, the two US satellite radio systems. This deal has been on hold for more than a year due to competition concerns, but that is still an unconscionably long time. With Chairman Martin’s OK, the full commission may soon vote on the $5 billion transaction. However, it appears that Mr. Martin extracted significant concessions that makes the deal serve the common interest as well as the shareholders of the two companies.

Among the concessions he has extracted, the most important is the “open radio” issue. This allows a common standard for the radios that will allow any manufacturer to build receivers and related devices. In the computer world, the separation of hardware and software over the years has resulted in much lower prices and much better devices due to the competition among builders of computers. One may expect the same from those who produce the satellite-capable radios.

Another important wrinkle is the reservation of 24 channels for noncommercial and minority-interest use. This will actually prevent, or at least inhibit, the homogenization of content that has made FM music and AM talk radio so incredibly boring in the US. When one combines that with the agreement to allow “a la carte” purchasing of service, the result will be a more flexible and desirable product.

Both companies have to produce a radio that can receive both Sirius and XM signals within a year. This is a big concession from the government because they were required to do this a part of their initial licensing 11 years ago. They have not produced one for the market as yet.

This isn’t a done deal, though. The other four commissioners have not made their positions clear thus far. However, the Mr. Martin’s decision to get off the fence may force a vote sooner rather than later. It is already long overdue, and an up-or-down vote is the least the two companies deserve. The Justice Department has approved it, and the shareholders have OKed the deal. If the FCC isn’t going to go along, it needs to act. And if it is, why delay any more?

© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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